In case you missed it:

• UK May CPI +8.7% vs 8.4% y/y expected
• Hot UK inflation continues to vindicate higher BOE rates
• Traders continue to vote higher for longer on UK rates

This article was written by Justin Low at www.forexlive.com.

• UK May CPI +8.7% vs 8.4% y/y expected
• Hot UK inflation continues to vindicate higher BOE rates
• Pound spike on inflation data fairly short-lived
• ECB’s Kazimir: Further policy tightening in September is not certain
• BOJ’s Ueda: Will patiently maintain easy monetary policy to achieve 2% inflation target
• BOJ’s Adachi: If there is a global recession, will have to keep easy policy
• Ifo sees German recession to be sharper than expected
• UK June CBI trends total orders -15 vs -17 expected
• US MBA mortgage applications w.e. 16 June +0.5% vs +7.2% prior

Markets:

• CAD leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 2.9 bps to 3,753%
• Gold down 0.1% to $1,934.10
• WTI crude flat at $71.21
• Bitcoin up 2.8% to $28,966

The BOE would probably wish that their policy decision this month came a week earlier, as they now look further behind the curve in trying to address the inflation problem in the UK.

Headline annual inflation for the month of May was unchanged to April but core annual inflation continues to run higher. That is posing serious questions on the risk of stagflation in the UK, as monetary policy tightening is failing to have any effect it would seem.

A 25 bps rate hike was already well priced in coming into today but now traders are looking for at least a 50 bps move either tomorrow or in August, with nearly 75 bps worth of rate hikes priced in by then.

The pound caught a brief jump on the data, with GBP/USD moving up from 1.2765 to 1.2802 before quickly giving that back and then some after. The pair fell back to just below 1.2700 at the lows before keeping around 1.2720-30 at the moment. I touched more on the move in this post here.

The hotter UK inflation data kept bond yields underpinned during the session but the advance in Treasury yields is not too striking. At one point, yields even turned back flat in European morning trade. I reckon that speaks to the risk rotation we have been seeing so far this week, as equities also continue to stay more sluggish.

Again, month-end and quarter-end flows are a consideration in this regard. So, there’s that to think about when looking at the market moves this week.

In FX, the dollar remains somewhat steady as there is a lack of appetite among other major currencies today. USD/JPY did move a little higher to briefly hold above 142.00 but is now sitting back at 141.80 – just up by 0.3% on the day.

Let’s see what Powell has to offer next but as mentioned earlier, I won’t be holding my breath for any major remarks – not when it is just a testimony to Congress and it coming a week after the FOMC meeting.

This article was written by Justin Low at www.forexlive.com.

• Prior +7.2%
• Market index 209.8 vs 208.8 prior
• Purchase index 165.6 vs 163.2 prior
• Refinance index 425.1 vs 434.1 prior
• 30-year mortgage rate 6.73% vs 6.77% prior

There was just a slight increase in mortgage activity in the past week, with the increase in purchases helping to offset a decline in refinancing. Overall, housing market conditions are still struggling and with the Fed still holding the higher for longer conviction, it’s tough to see things changing.

This article was written by Justin Low at www.forexlive.com.

Ethereum’s
price faced significant pressures due to the recent regulatory crackdowns and
the more hawkish expectations on interest rates. However, despite these
challenges, the cryptocurrency displayed remarkable resilience and made a
strong comeback once the market’s hawkish sentiment subsided, and regulatory
concerns eased. Additionally, the recent robust recovery from a critical
support level hints at the possibility of further upward momentum, potentially
leading to a breakout of the 2100 high.

Ethereum Technical Analysis
– Daily Timeframe

On the daily chart, we can see that Ethereum has
recently bounced back from a strong support at the
1681 level where we can also find the 61.8% Fibonacci retracement level
and the upward trendline. Since
then, the price rallied strongly into the downward trendline and now the
formation looks like a descending triangle pattern.

The price can break on either side of the pattern
and generally what follows is a strong move in the direction of the breakout.
So, if the price breaks to the upside, we can expect Ethereum to reach again
the 2000 level, while if it breaks to the downside, we should expect a fall
into the swing low level at 1400.

Ethereum Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that the rally is
getting a bit exhausted as depicted by the long candlestick wicks near the
trendline. This should be a sign of an imminent pullback and the likely support
zone would be at the 1775 level. In fact, we can see that the price has reacted
to that level multiple times in the past weeks and for more confluence we have
the upward trendline and the 38.2% or 50% Fibonacci retracement level.

The price is also a bit overextended as shown by
the distance between the price and the blue 8 moving average. In such
instances, we can generally see some consolidation or a pullback into the
trendline before the next move.

Ethereum Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see more
closely the support zone at the 1775 level with all the confluences mentioned
above. If we get a pullback into the zone, the buyers are likely to lean on it
with a defined stop just below it and target the breakout of the major downward
trendline to reach the 2000 level. More aggressive sellers can lean on the
downward trendline to target the support zone first and a break lower
afterwards, while more conservative sellers should wait for the price to break
below the upward trendline to target a breakout of the 1681 support that would
open the door for a selloff into the 1400 level.

Today, we have the Fed
Chair Powell testifying to Congress and if he sounds very hawkish, we should
expect the above-mentioned pullback to play out. Tomorrow we will see the US
Jobless Claims report, while on Friday we conclude the week with the US PMIs.

See also the video below:

This article was written by FL Contributors at www.forexlive.com.

The
recent regulatory attacks and the more hawkish repricing for the Fed interest
rates path weighed a lot on the Bitcoin price, but the cryptocurrency showed a
surprising resilience and rallied back strongly as soon as the hawkish
expectations waned, and the dust settled on the regulatory front. All else
being equal, the recent strong bounce from a key support level may also suggest
that we are about to see another extension to the upside, with a break of the
31K high being likely.

Bitcoin Technical Analysis
– Daily Timeframe

On the daily chart, we can see that the big divergence with the
MACD
eventually led to a sizeable pullback into the 25231 support where we
had also the 50% Fibonacci retracement level.
Since then, the price has rallied strongly into the trendline and yesterday
we got a breakout that led to a fast move upwards as more momentum buyers
jumped onboard. Now we can expect a pullback from the 28500 swing high level,
which from a risk management perspective would be better for the buyers.

Bitcoin Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can see that we are
starting to get some long candlestick wicks as the sellers fight back and the
buyers take some profits off the table. A good support level where the buyers
can lean onto is the upward trendline. In fact, we can find confluence with the
50% or 61.8% Fibonacci retracement level, the red 21 moving average, a
previous swing point and possibly even the broken downward trendline that may
act as support now.

Bitcoin Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see more
closely the quick rally since the break of the downward trendline into the
29000 level. Here is where we should start to see the pullback and we can see
even better how strong the support at the trendline is with so many confluences
in one spot. Aggressive sellers may want to pile in as soon as the price breaks
below the 28500 level to target the trendline. More conservative sellers should
wait for the price to break below the upward trendline to target the 25200
support.

Today, we have the Fed
Chair Powell’s Testimony to Congress and if he delivers very hawkish comments,
we can expect some selling in Bitcoin. Tomorrow we will see the US Jobless
Claims and on Friday we conclude with the US PMIs. If the data misses
expectations, we can expect more upside for Bitcoin, while if it beats, it
would put some pressure on the cryptocurrency.

This article was written by FL Contributors at www.forexlive.com.